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National Living Wage will ‘hinder manufacturing industry’

Published: February 8, 2016

The introduction of a national living wage will hinder job production in the future, manufacturer’s have warned.

Industry body EEF claimed that more than a third of manufacturers (36 per cent) see increasing pressure on business costs as a possible risk to growth this year.

Furthermore, nearly half (44 per cent) of manufacturers foreseeing more risks than opportunities in 2016.

Speaking about the findings, Tim Thomas, head of employment policy at EEF, said, “For those members affected by the rates there will be restructuring, which will mean re-crafting and redesigning jobs, and potentially losing some jobs. That is for a small category of members.

“For a larger category of members, the impact will be a pressure to maintain pay differentials. Semi-skilled workers will want to see a pay differential in relation to the National Living Wage. The knock-on effect is that skilled workers also want their differential maintained with semi-skilled workers. We are picking up indications of this ripple effect from members.”

Figures by EEF showed that nearly a fifth (19 per cent) of respondents said workforce restructuring would be their main response to the wage rises.

However, despite this, just five per cent said they thought this would have a negative impact on workforce relations

Although the majority of manufacturing firms pay more than the national living wage, it is feared that more highly paid workers may seek a wage increase to retain pay differentials.

Terry Scuoler, chief executive of EEF, said: “There is particularly good news about the number looking to prioritise investment in technology and innovation and those looking to explore new export markets.”

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